The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate strengthened by around 0.20% on Monday afternoon.
Given the complete absence of domestic data, the Pound fluctuated versus many of its major peers as a result of changes in the currency market. A slight depreciation can be attributed to dampened investor confidence amid political uncertainties as we draw nearer to the general election.
The Japanese Yen, meanwhile, softened versus many of its most traded currency rivals in response to dovish minutes from the Bank of Japan’s (BOJ) most recent policy meeting. Although the policymakers praised the positive effect of the policy easing adopted thus far, they also intimated that further stimulus may be required. Additional Yen declination is as a result of falling domestic Machine Orders in February.
The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate is currently trending in the region of 176.2400.
Pound Sterling (GBP) Exchange Rate Fluctuates ahead of General Election
As explained above, the complete absence of British economic data has seen movement dictated by fluctuations in the currency market. Sterling is holding in a position of strength against most commodity-correlated currencies thanks to disappointing data out of China.
With a general declination versus most of its major peers, however, the Pound is struggling against a lack of investor confidence as we fast approach the UK general election. With opinion polls showing different results, and with many considering the election to be the most hotly contested in modern political history, the Pound is unlikely to sustain any considerable gains until after the conclusion of the general election.
The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate dropped to a low of 175.4300 today.
Japanese Yen (JPY) Exchange Rate Softens on Machine Orders
In addition to BOJ policymakers hinting towards future policy easing, the Japanese Yen also softened in response to disappointing domestic data. However, the minutes did contain upbeat comments with regard to Japan’s regional economic recovery. ‘All regions said their economies are either recovering or recovering moderately,’ the BOJ said in the report, issued at a quarterly meeting of the bank’s regional branch managers.
Although February’s machine Orders increased by 5.9% on the year, which eclipsed the median market forecast increase of 4.3%, the monthly figure was not so impressive. Machine Orders declined by -0.4% in February which signalled the second consecutive month of decreasing orders.
‘The figure was not bad at all as it points to growth in core orders in the first quarter,’ said Koya Miyamae, senior economist at SMBC Nikko Securities. ‘But given weakening exports and private consumption, the pace of pickup will likely slow from April.’
Pound Sterling to Japanese Yen (GBP/JPY) Exchange Rate Forecast to Hold Gains
Given the lack of domestic data to provoke changes, the Pound Sterling to Japanese Yen (GBP/JPY) exchange rate is likely to hold gains for the remainder of Monday’s European session. Tuesday is likely to see heightened GBP/JPY movement with several influential British data publications due for release. The most significant of these will be March’s Consumer Price Index, as Bank of England (BoE) policymakers will be hoping that inflation moves away from the flat line figure registered previously.
The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate climbed to a high of 176.2700.
